WHISTLE BLOWING

PRESENTED BY:-RANJEET KAURMBA-2ND (FINANCE)428

What is whistle blowing

James (1995), defined Whistle blowing as “an attempt

by an employee or former employee of an organization

to disclose what he or she believes to be wrongdoings in

or by the organization”.

The wrongdoing might take the form of fraud, corruption or

mismanagement.

WHISTLEBLOWER◦An employee who discovers corporate misconduct and chooses to bring

it to the attention of others

Internal Whistle-blowing◦When an employee discovers corporate misconduct and brings it to the

attention of his supervisor, who then follows established procedures to

address the misconduct within the organization

External Whistle-blowing◦When an employee discovers corporate misconduct and chooses to

bring it to the attention of law enforcement agencies and/or the media

WHEN IS WHISTLE-BLOWING ETHICALEthical whistle-blowing must meet 5 conditions:

1) When the company, through a product or decision, will cause serious and considerable harm to the public

(as consumers or bystanders), or break existing laws, the employee should report the organization.

2) When the employee identifies a serious threat of harm, he or she should report it and state his or her

moral concern.

3) When the employee’s immediate supervisor does not act, the employee should exhaust the internal

procedures and chain of command to the board of directors

4) The employee must have documented evidence that is convincing to a reasonable, impartial observer that

his or her view of the situation is accurate, and evidence that the firm’s practice, product or policy

seriously threatens and puts in danger the public or product user.

5) The employee must have valid reasons to believe that revealing the wrongdoing to the public will result

in the changes necessary to remedy the situation

ETHICAL DILEMA

 The Mum Effect (reluctance to blow the whistle)

Audit report may contradict the best judgment and vested interests of the powerful players

backing a project; fear of reprisals

The Deaf Effect (reluctance to hear the whistle)

“I wrote lots of reports. I escalated things as much as I could, but in the end, they said, „We

really appreciate your efforts, but thanks, but no thanks‟”

The Blind Effect (reluctance to see the need to blow the whistle)

Established audit functions do not operate effectively because they try to conceal the

information from management

 

When is Whistle-Blowing Unethical?

Whistle-blowing must be questioned if:

◦Motivation is the opportunity for financial gain or media attention

◦Employee is carrying out a vendetta against the company

◦Key point – better be very sure of your facts and your evidence

better be irrefutable before blowing the whistle

The Telgi Scam In

Maharashtra

Indian Oil Corporatio

nScam (2005)

Gir National Forest

Park(2010)

Jayaraman Pondicherr

y University

Case

EXAMPLES OF WHISTLE BLOWING IN INDIA

STATISTICS FOR PERSPECTIVE

Percentage of whistleblowers who felt /

experienced an overall negative effect

as a result of their whistle blowing :

51% of govt. employees lost their job

82% harassed by superior

69% watched closely after blowing the

whistle

63% lost job responsibilities

60% fired

10% attempted suicide

Percentage of whistleblowers who felt /

experienced an overall positive effect as a

result of their whistle blowing :

20% felt their actions resulted in positive

changes

More than 50% (of responders) would do it

again

HOW TO ENCOURAGE WHISTLE BLOWING

1• Creating a Policy about

reporting illegal or unethical practices

2 • Getting endorsement from top management

3• Publicizing the

Organization’s Commitment

4 • Investigating & Following up

5 • Assessing the Organization’s Internal Whistle blowing System

Whistleblower Protection Act STAGE DATE

Introduction August 26,2010

Standing Committee referral

September 16, 2010

Standing Committee report

June 9, 2011

Lok SabhaPassed on 27 December 2011

Rajya SabhaPassed on 21 February 2014

HIGHLIGHTS OF THE BILL

The Bill seeks to protect whistleblowers, i.e. persons making a public interest

disclosure related to an act of corruption, misuse of power, or criminal offence by a

public servant.

Any public servant or any other person including a non-governmental organization

may make such a disclosure to the Central or State Vigilance Commission.

Every complaint has to include the identity of the complainant.

The Vigilance Commission shall not disclose the identity of the complainant

except to the head of the department if he deems it necessary. The Bill penalizes

any person who has disclosed the identity of the complainant.

The Bill prescribes penalties for knowingly making false complaints.

Satyendra Dubey A 31 year old IIT – Kanpur Civil Engineering graduate.

Employee of National Highways Authority of India.

Assigned Prime Minister’s pet project – The Golden Quadrilateral, to

connect the four corners of India.

Was posted at Koderma, Jharkhand as project director he would be in

charge of releasing funds for an extensive swathe of the under-construction

highway.

CASE STUDY- SATYENDRA

DUBEY

Findings in the Golden Quadrilateral Project

Sloppy project reports

Contracts awarded on basis of forged documents

Huge advances doled out to contractors

Rampant subletting to petty contractors who lacked the technical ability to work on this

mega-project(Dubey discovered that the contracted firm, Larsen & Toubro, had been

subcontracting the actual work to smaller low-technology groups, controlled by the

local mafia).

Everyone from Govt. engineers to MNC construction companies to local thugs seemed

involved in “LOOT OF PUBLIC MONEY”

What did Dubey do? Wrote a letter to his boss, NHAI Project Director SK

Soni, and to Brig Satish Kapoor, engineer overlooking the

supervision, there was no action.

Wrote a letter to the PM

Dubey also sent the same letter to the chairman of NHAI.

Mr. Dubey anticipated trouble and wrote a second letter,

again requesting anonymity but was ignored.

The Blind/ Deaf Effect

o The PMO didn’t bother either to

investigate

o For in an act of murderous

negligence, the PMO handed over

both the letter and the sheet with

Satyendra’s particulars to the Ministry

of Road Transport and Highways.

o At least eight officials scanned it

before passing it on to the National

Highway Authority of India.

In 2003, Dubey

was found dead in

Gaya… Whistle

Blowing Murder

“TO SEE WRONG AND NOT TO EXPOSE IT,IS TO BECOME A SILENT PARTNERTO ITS CONTINUANCE”.

“Dr John Raymond”

THANKS FOR

YOUR

ATTENTION